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Virtually all forms of commerce are based upon some form of transactional exchange of value - whether the goods or services are exchanged directly, as in the case of barter, or whether some component of the transaction involves monetary tokens of value. In the first case, valuation of the items exchanged can be established by convention, but is often simply determined in the moment, based on the relative needs of the parties. In a money-based economy, the items exchanged generally have a relatively fixed, broadly agreed upon monetary valuation, which may evolve over time based on market forces.

Such transactional exchanges may be equitable, exchanging value for perceived equal value, but especially in money-based economies, parties commonly seek a relative economic advantage in an exchange, known as profit. In an economy like capitalism, the profit-seeking aspect often becomes the primary purpose of a transaction rather than the utility of the goods or services or the quality of relationship between the parties.

In contrast, in a Pay-It-Forward transaction, a good or service is offered without the expectation of a direct, quid pro quo (pay-it-back) return of value. Rather, the beneficiary is encouraged (or morally mandated) to perform a similar, counterpart transfer of value at some point in the future. The nature of this future transaction however, is generally left to the discretion of the performing party. Whereas the impetus for a traditional value exchange transaction lies in satisfying personal need or gaining personal advantage, the goal of pay-it-forward is primarily to benefit the recipient and/or the greater community.

While pay-it-forward is somewhat related the notion of a gift economy, there is a greater implication that the transacted value will continue to circulate in some form through the general economy. Gifts are commonly intended to remain with the original recipient.

Viability of pay-it-forward economies

The long-term viability of a pay-it-forward economy generally depends upon a cohesive sense of community among the participants. In addition to attending to personal need, members must also appreciate the needs and health of the greater social and ecological system in which they dwell. This often involves an ability to defer immediate gratification on the faith that the benefits of aiding and supporting others and the community will ultimately redound in a way that elevates the lot of all.

Individualistic, competitive economies like capitalism tend to involve zero-sum transactions - that is, the gains of one must be offset by the losses of others. This is an artifact of an economy where value is largely stored in material goods or in money as a coupon for material goods. In contrast, pay-it-forward economies place additional value in more abstract social and ecological benefits - happiness, community, beauty, nature, artistic and intellectual pursuits, and other quality of life issues that are difficult to quantify and monetize in a capitalistic system. These latter qualities are generally open-ended and non-zero sum in that having more for the one does not diminish the supply for others.

In a world with a relatively small population and a large supply of resources, competitive economies can flourish with relative comfort for all. However, as worldwide resources and carrying capacity become stretched, the economic security and quality of life becomes increasingly uncertain for those less able to compete. Alternative, or complementary, economies may be needed as growing numbers of people become disenfranchised from the mainstream economy.

Additional resources

  • Pay it Forward Movement - real-life success stories of people practicing pay-it-forward
  • Pay It Forward Foundation - set up to educate and inspire students to realize that they can change the world, and provide them with opportunities to do so
  • Video from the theatrical release of Pay It Forward (2000, Warner Bros.)

See also


Author: Bill Miller